Bitcoin reached a peak at a price of $68,789.62 in November 2021. But it's trading below $20,000 (as of July 4th, 2022). This brings the most important questions. Is Bitcoin still worth investing in? it is too late to invest in Bitcoin? Is it a good dip to invest now? Should I avoid Bitcoin as the Bitcoin frenzy is over?
Should you invest in Bitcoin right now?
With the ongoing market downturns, and keeping in mind the economic uncertainty, if you did at all think of investing in cryptocurrencies before, this might feel like it's late now. However, this could actually be the best time for you to invest in Bitcoin.
Why? Actually, low cost can be advantageous, no matter how the current fluctuations are in the crypto market. You would see Bitcoin slipping to around 27% since its last rise. In February 2018, Ethereum too had fallen to roughly 33% from its peak. While the numbers don't look too promising, it also refers that crypto prices are on sale now. This is good news for a risk-averse investor, as this will be a good time to invest.
Buying Bitcoin can be the most affordable now, especially if you have been considering investing in cryptocurrencies for some time. While no one knows for sure what the future is likely to be, there is evidence that suggests that prices are going to rise again.
While several investors have been facing economic uncertainties, and more so with the Federal Reserve announcing to raise interest rates this year, none knows what the future holds, but Bitcoin is likely to hit it off again as this uncertainty is unlikely to stay for a prolonged period. As an investor, you can collect your handsome rewards later if you invest now when the prices are at their all-time lows.
Is Bitcoin the right investment for you?
This might be a fantastic investment opportunity for you to invest in Bitcoin, but you got to make sure if this is the right investment for you. Obviously, Bitcoin and other crypto-assets come with a higher risk than most stocks, mostly because it runs on speculation.
Cryptocurrencies have been enjoying a real-world utility now, but they have a long road ahead of themselves. As an investor, if you are risk-averse, you must make peace with the fact that all your investments could go down the drain if Bitcoin fails.
Can you digest the volatility of the crypto prices?
Besides thinking about how much volatility the market offers and whether or not you can digest it, you must be fully prepared yourself. Just like the last two months mentioned above, this year crypto prices fell, and when the prices fall, they fall really hard. This is why, as an investor, you must make sure you are fully aware that you know what you are investing in.
While planning your entire investment, you can plan to hold them for the long term when you are buying. Chances are that the crypto market will overcome downturns (if any), but that might take some time and no one knows for sure when that will be.
On the other hand, sometimes crypto investors plan for short-term volatility, and if you see yourself falling into that category, then crypto is the right form of investment for you. You can also be rewarded more if you buy when the prices are lower.
Cons of investing in Bitcoin
Ignoring the extreme volatility of Bitcoin, it's no secret that it has been widely adopted and has a huge user base, however, Bitcoin too does come up with its own set of disadvantages. It is said usually in the financial sector that the more an investor knows the more capable he is to make better and real-time decisions.
Here are some of the cons of investing in Bitcoin:
When Bitcoin was first introduced there was a limit set which was up to 21 million, which means that only 21 million Bitcoins could ever exist in the crypto space. This indicates Bitcoin's scarcity and this is also responsible for the varying prices of Bitcoin, and the uncertainty of Bitcoin, including security breaches, add to its disadvantage.
- Not bound by government rules
Bitcoin is a currency that is decentralized and adds to its benefits, however, that could also mean a lot of disadvantages to investors as any form of investment in Bitcoin cannot be regulated. You have to remember that Bitcoin is not a form of currency that is regulated by a central bank, so it comes minus any legal protection.
- Not reversible
As an investor in Bitcoin, you must know that Bitcoin transactions are mostly held anonymously, which means they are not regulated and definitely not secure. No one can do anything if by chance a certain amount of money is being sent to the wrong person.
- Bitcoin's use is limited
Bitcoin is still to make its way to being accepted widely. So, you are bound every time you want to spend your money as there is a limit to how the money can be spent, not like using a credit or a debit card.
So, as an investor should you or should you not invest in Bitcoin? We have enlisted the greatest benefits of investing in Bitcoin right above, however, traditional investors still hold the view that investing in Bitcoin is risky. Of course, it is very important for you to be well researched and have a good understanding of the crypto market before making an investment.Sure, when you are investing, it's important to go through the list of the pros and cons, understand how the crypto industry works and what kind of risks are you exposing yourself to. After all, prevention is better than cure.